Meta Stock Gains: Investors Shrug Off Bigger-Than-Expected $65 Billion AI Spending Plan

Meta Platforms Inc. (META) stock has been on a roll, hitting an all-time high on Friday, despite announcing a bigger-than-expected capital expenditure (Capex) plan for 2025. The company plans to invest between $60 billion and $65 billion, primarily in artificial intelligence (AI) infrastructure, including a massive data center and expanding its AI teams. This news comes just days after the announcement of the Stargate AI project, a joint venture between OpenAI, SoftBank, and Oracle.



Analysts had expected Meta to spend around $51.3 billion on capital expenditures in 2025, so the actual guidance of $60 billion to $65 billion exceeded these estimates. Despite this, Meta's stock price rose 1.7% on Friday, closing at an all-time high of $647.49. This positive market reaction suggests that investors are optimistic about the company's long-term prospects and the potential benefits of its AI investments.



Gene Munster, a top analyst at Deepwater Asset Management, believes that Meta's increased investment in AI infrastructure will particularly benefit hardware players like Nvidia in the short term. In the long term, the higher Capex is expected to accelerate the AI flywheel, leading to more innovation, lower usage costs, an increase in customers, and consequently, more investment. However, Munster also issued a reminder that the market's run will "end in a spectacular bubble burst."

Meta's CEO, Mark Zuckerberg, expects the company's AI efforts to pay off in the long run. He anticipates that Meta AI will become the leading assistant serving more than 1 billion people, Llama 4 will become the leading state-of-the-art model, and the company will build an AI engineer that will contribute increasing amounts of code to its R&D efforts.



While the market has reacted positively to Meta's AI spending plan, there are potential risks to consider. Meta's loosening of speech restrictions has raised concerns among advertisers about brand safety, which could negatively impact the company's revenue and valuation. Additionally, the competitive landscape in the AI space is intense, with other tech giants and startups vying for dominance.

In conclusion, Meta's increased capital expenditure on AI infrastructure has been met with a positive market reaction, with the company's stock price hitting an all-time high. Investors appear to be shrugging off the bigger-than-expected spending plan, focusing instead on the potential long-term benefits of Meta's AI investments. However, the sustainability of this optimism depends on Meta's ability to navigate the competitive landscape, overcome technological challenges, maintain financial sustainability, and manage regulatory and geopolitical risks.